What the BlackBerry Passport Tells us About the Company’s Future


It's time to get down to business. Source: BlackBerry.

Let's look past the Passport's square shape for a moment. Sure, it's the most noticeable feature on BlackBerry's (NASDAQ: BBRY  ) newest device, but it's more important to focus on why the device takes this shape.

The company's CEO, John Chen, is in the middle of turning around the company, and for BlackBerry that means refocusing on enterprise customers -- and the Passport is the physical representation of that strategy.

Why Blackberry needs to be different
It's easy to think the Passport's boxy design is just to differentiate itself from the masses of iPhones and Android phones on the market. The device features a 4.5-inch square screen with a 1,400 x 1,400 pixel display, and a recent partnership with Amazon.com ensures a ton of Android apps will run on the device.

But at the heart of the Passport is BlackBerry's attempt to lure back its core customer base, which has always been the enterprise sector. The display size offers a wider view of documents and the large physical Qwerty keyboard allows for easy typing. Even the Passport's name evokes a business persona. And that's a good thing. Chen has said that 80% of the company's mobile subscribers are business users.

But BlackBerry's faced headwinds in the enterprise market lately, as Apple's (NASDAQ: AAPL  )  made some huge gains in the business world. A recent report from Good Technology showed the iPhone far outpaces enterprise sector activations in the second quarter compared to Android and Microsoft's Windows Phone.


Source: Good Technology.

It's worth noting that BlackBerry was excluded from the data because Good Technology doesn't have access to net enterprise activations on BB10 devices through its services.

On top of Apple's gains, the company's latest partnership with IBM should help push its enterprise mobile sales even higher, leaving BlackBerry even further behind.

Vision and execution
BlackBerry knows one of its only plays in the mobile handset space is to double down on enterprise. That's one of the reasons why it purchased the German-based voice and data encryption company, Secusmart, last month. The company brings mobile and landline security to business and governments and it could help BlackBerry set itself apart from Andorid and iPhone in the sector.

Chen's management seems to be turning around some aspects of the company though, even if just a little. Adjusted operating expenses decreased 57% year over year, helping BlackBerry post a profit of $23 million in its 2015 fiscal first quarter.

But much of BlackBerry's cost-cutting measures are complete, and now it's time to boost sales -- in Q1 revenue fell 69%, to $966 million. Hardware sales, including handsets, will be a big part of this. In the most recent quarter, hardware sales made up 39% of the company's revenue.

Though the Passport could prove to be a smart move in winning back enterprise users, or at least holding on to current ones, we have to be realistic about BlackBerry's current position.

Just last week IDC released its latest smartphone vendor data, and BlackBerry's struggling even more than before. In Q2 2013, the company had 2.8% worldwide smartphone market share. But in Q2 2014 that fell to just 0.5%.

The company can't continue to experience drops like this in the worldwide market, battle Apple in the enterprise sector, and still have a fighting chance in selling lots of mobile handsets. So while the Passport shows BlackBerry is committed to its future with business users, we'll have to wait until the device launches next month to see if the feeling's mutual.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3074394, ~/Articles/ArticleHandler.aspx, 10/23/2014 1:36:31 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement